Russia moved this week to support the ruble, after an estimated $21 billion left the country on the effects of the Georgia conflict, the media reports.

The country's central bank stepped in to slow the ruble's fall. It is down 2 percent against its own euro/dollar basket just on Sept. 3 and 4 to the lowest since Russia last adjusted its basket in February 2007.

To stop the currency from falling farther, the central bank sold an estimated $3.5 billion to $4 billion in reserves. Russia's gold and foreign exchange reserves fell by 2.7 percent between Aug. 8 and Aug. 15.

A sell-off in local stocks (the benchmark RTS fell almost 8 percent Sept. 3 to Sept. 4), the oil price decline, and U.S. dollar recovery against the euro may have led to closing of ruble long bets and outflows.

Alpha Bank now forecasts inflation of 0.6 percent in September and sees its 13 percent annual target as "very optimistic."

For much of 2008, says Morgan Stanley, the bank was reluctant to let the currency rise too much against its basket for fear of attracting inflows and thus weakening non-commodity competitiveness.

Longer term, Russia intends to speed up its conversion to inflation targeting and to freely float the ruble, the bank states.

In my opinion, the Russian market has begun to offer interesting buying opportunities because of this ongoing punishment of the currency.

Here are my favorite stock picks right now:

Gazprom (GAZP) Oil and gas producer Gazprom's revenues, profitability, and fundamental valuation are all booming on the back of high oil prices.

Although cost inflation is a concern, investors should not lose sight of the company's compelling earnings profile and valuation. Pricing in a long-term oil price of only some $68 a barrel, the company is seriously undervalued and offers a significant near-term catalyst in the form of very strong near-term EBITDA growth. In 2008, EBITDA should rise around 80 percent year-on-year, while 2009 could see another 50 percent growth should oil prices remain around $140 a barrel.

Rosneft (ROSN) This is Russia's largest oil producer. Rosneft provides excellent exposure to the upcoming change in the Russian oil taxation regime and is rapidly becoming a proxy play on the Russian oil sector.

Benefiting from the perception of lower risk owing to the state's ownership, Rosneft boasts a growing production profile well into 2012 at between 5 percent to 10 percent annually and has the capacity to dramatically increase investment in refining upgrades once the government's tax priorities are unveiled.

KazakhGold (KZG) I see KazakhGold as a somewhat more speculative short-term hedge against turbulence on global markets. It trades at significant discounts to its emerging market peers. Gold output grew to 236,000 ounces in 2007 from 218,000 in 2006. The company also plans to boost production to 1 million ounces in the coming years.

Russia moved this week to support the ruble, after an estimated $21 billion left the country on the effects of the Georgia conflict, the media reports.The country's central bank stepped in to slow the ruble's fall. It is down 2 percent against its own euro/dollar basket...